Report: Service providers tap into home automation to reduce churn

Home automation is a burgeoning sector for service providers because it provides incremental revenues and reduces customer churn, according to a report by Infonetics Research.

"While the home automation market is still young, major operators, including Verizon, AT&T, Comcast, Time Warner Cable and China Telecom, have already made public announcements regarding home automation services, and some have begun initial rollouts, and many more will jump into the game this year," said Jeff Heynen, directing analyst for broadband access and video at Infonetics Research. "The potential customer loyalty and incremental revenue attached to home automation services, particularly home security and home energy management, are too enticing for any operator to pass up. Many broadband operators are starting out small, offering remote control of lighting, doors, thermostats, audio, video and security systems. The goal will then be to layer on additional revenue-generating services, such as a full-fledged home security system."

Highlights of Infonetics Research's survey included:

The top two reasons broadband providers were deploying home automation services were to increase average revenue per user (ARPU) and reduce subscriber churn.

Home security service was the most popular home control service offered currently and will remain a top home automation service.

Monitoring of appliances and monitoring of whole-home energy usage will see the biggest growth among home automation services between now and 2013.

While the bulk of Infonetics' survey respondents were fixed-line operators and service providers, there was strong evidence to suggest that mobile operators were also looking to muscle in on the home automation opportunity.

Wi-Fi was the most popular wireless technology used by operators to deliver home automation services, but ZigBee and Z-Wave were growing the fastest, seen by many as better options because they were low-power mesh networking technologies.

ZigBee chips were being installed in most smart energy meters in North America, and most companies developing smart home adapters were using it.

Control4 and Honeywell were viewed by respondent operators as the top home automation equipment and software suppliers.

Time Warner Cable, AT&T, Comcast and Verizon have thrown their weight behind home automation, or home control, services, and the rollouts are expected to continue this year.

On the cable operator front, Comcast announced this morning that its Xfinity Home service is now available in its Denver system after previous deployments in Houston, Philadelphia, Portland, and parts of Florida and Tennessee.

Time Warner Cable has its home automation service offering, which it calls IntelligentHome, deployed in five cities, with more launches slated for this year.

"The product that we call home security is about much, much more than that," said Time Warner Cable CEO Glenn Britt during last week's fourth-quarter earnings call. "It's a new set of technology that lets you monitor all sorts of things in your home, and we call it home security because everybody's familiar with that. But this technology can allow you to look at things in your home. It turns out a lot of people like to look at their pets when they're not at home, which may sound silly, but it's something people actually like to do. It allows you to just adjust your thermostat remotely, will allow for transmission of medical information, potentially. So it's a very interesting suite of products."

Speaking on just the security part of home automation during the earnings call, Time Warner Cable President and COO Rob Marcus said the outlook was promising.

"The [residential] home security business is somewhere in the neighborhood of a $9 billion business," he said. "If you multiply that by the percentage of the total U.S. we cover, we're talking about an opportunity of, let's say it's, I don't know, $1.5 billion to $2 billion. Penetration of U.S. homes is somewhere in the neighborhood of 18 percent or 19 percent, so we think it's a nice business. We'd love to see meaningful penetration in 2013, but I think it's a little early to tell."